Real Return
Adjust a nominal investment return for inflation.
About Real Return
The real return adjusts a nominal return for inflation, showing the actual gain in purchasing power. It is computed by dividing the gross nominal rate by the inflation factor. Only real returns matter for maintaining lifestyle, since inflation silently erodes a portion of every nominal gain.
Formula
Real Return
Real return = (1 + nominal)/(1 + inflation) - 1
- nominal
- return before inflation
Worked example
With the default values below, Real Return returns Real Return of 4.85%. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Nominal returnaccepts 0–100 %
- 8 %
- Inflation rateaccepts 0–50 %
- 3 %
Results
- Real Return
- 4.85%
- Inflation Drag
- 3.15%
- Real Gain on $1,000
- $48.54
Step by step
- 1Values used
- 2Real Return
- 3Real Return= 4.85
- 4Inflation Drag= 3.15
- 5Real Gain on $1,000= 48.54
Assumptions and limits
- The result is derived only from the 2 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take tax, fees or charges or compounding frequency into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
How is Real Return calculated?
Real return = (1 + nominal)/(1 + inflation) - 1 The real return adjusts a nominal return for inflation, showing the actual gain in purchasing power. It is computed by dividing the gross nominal rate by the inflation factor.
Why does Real Return matter?
Only real returns matter for maintaining lifestyle, since inflation silently erodes a portion of every nominal gain.
What values do I need to enter?
This calculator takes 2 inputs: Nominal return, Inflation rate. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.